Joseph Perkins: Buyer's remorse over medical device tax

The medical device industry suddenly finds itself condemned to least-favored industry status on the editorial pages of both the New York Times and the Washington Post.

Its unpardonable sin? Daring to challenge a new 2.3 percent excise tax on medical devices, which is supposed to raise $30 billion over 10 years to bankroll Obamacare.

A fortnight ago, the Senate approved a non-binding amendment to the federal budget to repeal the odious new tax.

Even such liberal senators as Elizabeth Warren and Al Franken, who support Obamacare, voted with the 72-20 bipartisan majority.

The Times suggested something foul took place. The implication was that Warren, Franken and other Democrats that voted for repeal were seduced by a "forceful and well-financed campaign" by the medical device community.

The Post claimed the Senate repealists were duped by the industry's "doomsday scenario" that the tax will cost jobs, delay life-saving devices and diagnostics coming to market, and threaten U.S. primacy in export of medical devices.

I'm convinced that lawmakers had a moment of clarity. That they came to realize that imposing an unnecessary new tax on the medical device industry would be the fiscal equivalent of handicapping, if not killing, the goose that lays the golden eggs.

Case in point: Every year, nearly 18,000 Americans undergo aortic valve replacement surgery. It is a life-saving procedure for patients suffering from aortic stenosis, a narrowing of the valve to the point that it reduces blood flow from the heart.

As it is now, the surgery is extremely invasive. Doctors open a patient's chest, using an oscillating saw to split the sternum in two, which they spread apart with a retractor, thereby exposing the heart.

After replacing the defective valve, a patient is stitched up and left to painful recovery from having gone under the knife.

Enter Edwards Lifesciences Corp., based in Irvine. It has brought to market a transcatheter heart valve that does not require installation by way of invasive open heart surgery.

Instead, its "Sapien" transcatheter, approved by the Food Drug and Administration in 2011, has made it possible for physicians to change the valve percutaneously (that is, without opening the chest).

The pencil-sized Sapien is inserted in the femoral artery (which carries blood to the leg) through a small incision near the groin. It is snaked nearly 40 inches to the aortic valve, where it inflates and restores normal blood flow in the heart.

So far, the FDA has approved use of Lifesciences' medical device for, first, patients too infirm to survive open-heart surgery, then, additionally, patients eligible for surgery, but at high risk for serious surgical complication or death. The next step is to make the Sapien available to all 18,000 patients a year that receive aortic valve replacement.

The Times and Post don't think it is unreasonable that medical device companies like Lifesciences pay a new 2.3 percent tax on revenues – in addition to federal taxes they already pay. What they conveniently overlook is what it takes for those companies to successfully bring an innovation to market.

Lifesciences invested 12 years and $1 billion in research and development on the Sapien. It will be a number of years before the medical device company sees a return on that investment.

Warren, as well as many of her fellow Senate Democrats, hopes to find a means other than the medical device tax to bankroll Obamacare.

Meanwhile, the Times chided, even if replacement revenue is found, there are "more important purposes" for it, like additional federal outlays for "education and infrastructure."

That shows the Gray Lady's disregard for the tremendous contribution the medical device industry makes to the health and quality of life of the tens of millions of Americans.

Moreover, it also shows blatant disregard for those who rely daily on their wheelchair, insulin pump, artificial limbs, transcatheter heart valve or any other of a number of medical devices or diagnostics.

And what neither the Times or Post noted in their screeds against companies like Lifesciences is that the medical device industry is both highly-competitive and price conscious. In fact, medical device prices increased a mere 1 percent between 1989 and 2009. Over the same span, the consumer price index rose 2.8 percent, while the CPI for medical care rose 4.7 percent.

The U.S. medical device industry is one of this nation's economic bright spots. It certainly does not deserve the least favored industry status to which it has been consigned by the editorialists at the Times and the Post.

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